Senator unveils tax-free savings plan to rescue American Dream from soaring home costs
Buying a home was once the bedrock of the American Dream, but for millions of families, that dream is being priced out of reach.
With the typical down payment more than doubling since 2019 to $30,400, Sen. Rick Scott, R-Fla., is moving to bypass "economy-crushing" inflation. His newly introduced American Dream Accounts Act would empower first-time buyers to shield their savings from the IRS, allowing them to build a down payment faster and reclaim a stake in the country’s future.
"I grew up in public housing and watched my family struggle to make ends meet. For us, owning a home was out of reach because we couldn't afford it," Scott said in a press release. "Today, so many Americans are facing that same struggle, especially young first-time buyers who view homeownership as a critical milestone to help them achieve their American Dream."
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On Friday, the senator introduced the bill, which would allow for tax-exempt contributions and qualified withdrawals for down payments. Individuals under 35 years old can contribute up to $7,500 annually, while those over 35 have a "catch-up" limit of $10,000 per year.
There’s flexibility for couples as two buyers can combine distributions, allowing for a total qualified distribution of up to $500,000.
However, nonqualified withdrawals will face a 10% penalty, mirroring traditional 401(k) rules to ensure the money remains focused on buying a home.
Realtor.com’s latest Down Payment Report found that the average amount needed for a home rose to $30,400 in the third quarter of 2025, double the figure from 2019. Additionally, the report estimated that it takes about seven years to save for that down payment.
"Unfortunately, years of inflation-driving, economy-crushing Democrat-led policies aren’t helping make it any easier. That’s wrong, and it’s why I am fighting every day to deliver real solutions that make housing more affordable for everyday Americans and make the dream of homeownership a reality," Scott said.
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"Homeownership means stability and economic mobility," he continued. "This bill will help first-time buyers save faster, and their money go farther to ease the financial barrier to homeownership for families."
While Sen. Scott’s bill takes the initiative to the federal level, several states, including Virginia, Colorado, Iowa and Oregon, have pioneered first-time homebuyer savings accounts to help Americans reach homeownership goals.